The Nature of Islamic Accounting and Methodology Used in Muslim Countries: Practical Application in UAE

Abstract

Following the growth of Islamic Economy, the demand for Islamic Accounting is higher than any other time. This study reviews and scrutinizes accounting postulates and principles from an Islamic perspective. In this respect, Islamic accounting has been one of the most important aspects in today’s business practices and procedures, most particularly for Islamic organisations and businesses. This is because of the growing number of Islamic organisations around the world and the growing adherence to Islamic Shari'ah by Islamic organisations as part of their operations. The purpose of this study is to investigate the concept of Islamic accounting, distinguishing Islamic accounting from conventional or typical accounting and identifying the current challenges and issues facing Islamic accounting practices. This study also addresses issues regarding the notion of Islamic accounting methodology and practices the way they are presented in the balance sheet. Questionnaires were conducted to five Islamic accounting organisation systems with a total of 50 participants. Findings showed significant perceptions of participants with the characteristics of Islamic accounting, and most especially on the characteristics pointing to compliance with Islamic Shari'ah teachings and values. Findings also noted that there was a strong agreement amongst participants with regards to the objectives of Islamic accounting identified by literature.